HMO chaos as landlords take council to court

The constant chaos over how councils manage shared housing has reached a new low as a consortium of landlords and letting agents in Oxford has started legal action to stop a move they fear will shut down hundreds of properties.

The problem is private rented shared housing – technically termed houses in multiple occupation or HMOs – serve a key purpose in the rental market providing homes for thousands of students and singles.

The boom in student numbers and number of single households – both documented in recent statistics as fast outgrowing other sectors of the population – is putting pressure on the housing market.

A recent report claimed a million couples live apart as separate households and the trend is growing.

Oxford City Council has 5,000 HMOs with about 25,000 renters, who are mostly students. These properties generate huge numbers of complaints from neighbours fed up with noise, abuse, overflowing rubbish and other antisocial behaviour they claim people living in the HMOs cause.

The council wants to take on special powers to root out the poor landlords and to encourage better living conditions for tenants and neighbours. The issue is they want to phase this in over 3-4 years and during in that time, HMOs that are trading legally now may lose their licences and consequently will suffer loss of property values and loss of rental earnings.

Quite obviously property investors who have sunk thousands in to their portfolios are more than a little peeved over this move.

The last government planned to legislate to solve the problem (and win votes) by introducing new planning restraints on HMOs from April 6 2010. Now, the new government has reversed that power from October 1 2010 and has cleverly passed the HMO management buck to local councils.

Housing Minister Grant Shapps has said councils can take on extra powers under the Housing Act to micro-control the numbers and licensing conditions of HMOs in their areas.

Oxford is bearing the torch as the first council to do so, and now they face court action to halt the scheme because landlords and letting agents claim the new licensing proposal restricts their right to let their property.

Privately, other councils, like Loughborough have sat back to see what happens in Oxford because they have received legal advice that suggests any council imposing extra HMO controls could face unlimited and open-ended claims for damages that makes setting up a scheme unviable.

The rumour is Mr Shapps is considering changing HMO rules yet again to indemnify councils against loss of rental income claims.

What HMOs need is not tinkering with the rules but a properly considered and working policy that reflects the investment and expertise of private landlords, while balancing the need for council to regulate against the Rigsby’s who rip off tenants with poor housing.

Best of luck with that, Mr Shapps!

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